Obradovich: Expanding Medicaid may be best - for now

Feb. 18, 2013

Written by

Kathie Obradovich

This week could prove to be a turning point in the question of whether Iowa expands Medicaid.

Gov. Terry Branstad said Monday that he plans to meet in Washington, D.C., with Kathleen Sebelius, U.S. secretary of health and human services, to discuss the stateís options for providing health insurance. He may find out the state has little choice.

The Republican governor has long resisted the federal governmentís pressure to expand the health care program. The expansion was originally a mandate under the Affordable Care Act, but the U.S. Supreme Court found that Congress couldnít force states to comply. So now itís voluntary, and the feds promise to pay for the entire increase for the first three years and most of the cost after that.

Branstadís concerns are mostly cost-related. They are reasonable when you consider history. The state has been unable to control cost increases for the roughly 350,000 people enrolled in Medicaid now. Expansion would add another 150,000.

The federal government has a lousy track record of keeping its promises, Branstad said. ďThey say, ĎOh, donít worry, itís not going to cost anything.í Now, we know thatís not true, because weíve seen whatís happened in the past. And weíve seen when the federal government gets into trouble, they push it onto the state.Ē

The federal government is headed for trouble right now. The deadline for the fiscal cliff known as sequestration is March 1, and entitlement programs will be on the chopping block. If the federal government reneges on its promises after a half-million Iowans are dependent on Medicaid, the state would have little choice but to raise taxes or cut education programs to pay for it.

The governorís preference is to use an existing state-federal program called IowaCare to cover people who can neither afford private insurance nor qualify under existing Medicaid rules. IowaCare covers about 66,000 Iowans today.

There are several problems with IowaCare, however. Itís more expensive for the state than Medicaid, and it provides less coverage. Patients have to travel to Des Moines or Iowa City for care, and they donít get coverage for drugs or mental health treatment.

IowaCare gets $95 million from the federal government, making it vulnerable to budget cuts. It also needs a waiver from the Obama administration, which obviously would rather see the state expand Medicaid. Sebelius could tell Branstad to take a hike.

The governor likes to say the best way for the state to manage health care costs is for Iowans to adopt better health habits. Heís right, to a point. But prevention does nothing for people who are sick today and canít access care. We all know plenty of health-conscious people who fall ill.

The state remains divided over whether to expand Medicaid. The Registerís Iowa Poll published Wednesday shows Iowans evenly split. Democrats are mostly in favor; Republicans are against it.

The Iowa Hospital Association is strongly in favor of expansion, in part because it is needed to offset the ACAís cuts in Medicare reimbursement. If hospitals are threatened, it wonít be long before political pressure increases among Iowans and the business community to address the problem.

In a perfect world, Congress would adopt a predictable path toward deficit reduction and Obamacare would bend down the cost curve for health care. Iowans would all have good jobs with insurance and plenty of time to go to the gym.

In an imperfect world, expanding Medicaid looks like the stateís most cost-effective means of helping Iowans in need in the short term. That doesnít mean Branstad is wrong to worry about the long term, however. The decisions made this spring may look entirely different next year, when Obamacare is being fully implemented and the governorís race is in full swing.